Even though only 1% of the internet population is making a purchase online in Nigeria, the e-commerce purchase value is estimated to reach $1 billion this year. And the space has a new entrant– PayPal. They want to facilitate payments as the e-commerce adoption rises in Africa’s biggest economy, Nigeria.
PayPal services recently rolled out across 10 new markets, including four African nations (Nigeria, Cameroon, Ivory Coast, and Zimbabwe). Now anyone with access to the Internet and a card authorized for Internet transactions by the issuing bank will be able to register for a PayPal account and start making payments.
However, e-commerce is still struggling with its own issues; internet penetration, abysmal infrastructure, port delays, and other supply chain woes and payments. Taking away the pain of payment issues via a trusted third party is good news for Nigerian e-commerce players big and small – Konga, Jumia and others.
Payments were tough nuts to crack as users weren’t feeling safe to part ways with their banking details and some cards didn’t even work properly as the payments decline frequently. The task of persuading shoppers to trust websites got easier, and PayPal is on the brink of addressing just that. Not only for Nigerians to buy locally, but also internationally with ease.
The news of Bank Partnership
Nigeria’s oldest commercial bank with more than 10.5 million customers, FirstBank Nigeria, has become exclusive partner of PayPal in Nigeria. PayPal had done a similar local-bank partnership with First National Bank (FNB) in South Africa four years ago and Equity Bank in Kenya last year. According to the official statement from the company, “Over the first week of the launch of its service, PayPal has signed up ‘tens of thousands’ of Nigerians.” Ever since, consumers in Nigeria have been busy purchasing items from Britain, China and the United States and paying via their PayPal.
“We have seen great uptake by Nigerians,” Malvina Goldfeld, PayPal’s head of business development for sub-Saharan Africa, said in Lagos.
This new partnership will make shopping online more convenient for Nigerians, with FirstBank cards being accepted in about 203 countries where PayPal operates.
Bisi Onasanya, group managing director of FirstBank Nigeria, said, “Nigerian cards used to have limited acceptance by international merchants. But it is no longer possible for Nigeria to be isolated; it is now important that people’s desire for online purchases underscores necessity for internationally acceptable e-payment.” FirstBank has the largest payment card holders in Nigeria. It was said the bank processes 34 percent of the banking industry’s electronic transactions.
It is a win-win partnership, PayPal gets to capture some value out of the growing digital payment space in Nigeria while FirstBank will get to provide its customers global service instantly (with PayPal as safety-mediator) that they can’t get merely from Visa & Master card partnership.
What do we need more?
The only ones who stand to lose could be the local payment companies if they don’t have a trick or two up their sleeves to rise above this, by innovating from the side where PayPal’s system is weak.
Erik Hersman once said, “You see, in Africa PayPal only allows you to send money to people; you can’t receive or withdraw it, which of course defeats the purpose of trying to run a business.”
We agree with Erik, so we wait till PayPal makes digital payments two way street where outbound and inbound payments could be made without discrimination. Or better if local startups rise up for the occasion and show us.